Australia-Pacific

trade: An official overview

The Australian Government's Department of Trade and Resources has prepared the following overview of Australia/Pacific trade as Dart of PlM’s treatment of the theme Australia in the Pacific.

n terms of close geographic

proximity, good shipping and

communications, Australia has

i traditional relationship with

he Pacific Island countries vhich is of mutual advan age.

The advances in economic ievelopment of individual countries in the region, and the lumber of countries reaching he status of independent lations means that for Aus ralia, traditional outlets for nanufactured and food pro ducts will call for care and

understanding to ensure that the established relations con tinue to develop. Greater agricultural output, for example, may allow smaller developing nations to place less reliance on Australia as a sup plier of foodstuffs.

For Australia, the problem

of marketing in competition

with other suppliers is not a new experience and there is no doubt that if the nation’s tra ditional share of the Pacific market is to be maintained, then a continued strong servic

ing of the area by exporters will have to be maintained much as it is in other parts of the world.

Pacific Island countries, however, can find in Australian

industry, technology and capi

tal markets most of the re sources that can assist their economic development pro grammes, and Australia is committed in a variety of ways

to assisting this development

through investment, including

aid and trade. In particular, the smaller scale of Australian industry and technology is well suited to the requirements of the Island countries.

Australia is not only a logical source of supply for many of the import requirements of the Pacific Island countries but offers an expanding market for most of the major export pro ducts available from Island countries.

In the area of investment, the

Australian Government spon sored a mission to Papua New Guinea in February this year to

investigate specific business

opportunities and has been actively following up the re sults with potential Australian investors since then.

The question of access to the Australian market for Pacific products is at present being examined. Australia is sym pathetic to the needs of developing countries of the re gion and has already indicated that despite the fact that the great majority of products from Island countries already have duty-free access to its domestic market, it is prepared to enter into a regional trade agreement with the South Pacific Island countries.

This undertaking was an nounced by the Australian Minister for Special Trade Representations, Mr R. V.

Garland, at the conclusion of a

meeting of trade ministers from the countries of the South Pacific Forum in June this year. It followed a decision by ministers to enter into nego tiations to establish a

comprehensive, non-reciprocal

trade agreement in favour of Island member countries with the object of achieving, pro

gressively, duty-free and unre

stricted access to the markets of Australia and New Zealand over as wide a range of pro

ducts as possible.

That an answer to this ques tion, and the question of the

future shape of the region’s

trade relations, be found and found quickly is essential. The region is too vast and varied to be considered in single econ omic units, and it is to the advantage of all that greater nteraction between the ndividual economies of the re gion should become more than ust an aim or ideal it must oecome fact.

Generally, the area could be

xonsidered in three geographic

mtities Papua New Guinea,

he Pacific Islands (principally hose nations with membership )f the South Pacific Forum), md Hawaii. The well-being of :ach area is important to the

iiture prosperity and stability

)f the total region.

Papua New Guinea:

\ustralia and Papua New

Gruinea, formerly its trust tern ary, have a special relation ship. This has not changed in

essence since independence

vas granted in 1975. Australia’s jading interest with the new ration is more than just two vay in the usual sense. While \ustralia is concerned to make he most of the country’s export potential, it is also actively

nvolved in giving assistance

md investment funds to local ndustries in PNG, and offers m export market for the goods moduced.

PNG is Australia’s 13th lar gest market, and its fourth lar gest for manufactures, with a ;olal value in 1977/78 of $237

Trillion. Major exports in

1977/78 were rice (sl7m),

eanned meat (sl6m), prefabri

:ated buildings ($7.9m),

excavating and levelling equip

ment ($6.3m), iron and steel bars, pipes, sheets, etc. ($6.2m),

petroleum and petroleum pro

ducts (s7.lm) and sugar ($6.6m).

PNG and Australia signed a Trade and Commercial Re lations Agreement in 1976, and an important part of this agree ment is the wide duty-free access to the Australian market given to PNG exports and pro vision for encouraging direct Australian investment in the social and economic develop ment of PNG. (Since 1977, di rect Australian investment in PNG has totalled $279 million.) In welcoming the formal agreement, Sir Maori Kiki forecast a growing market for PNG’s goods in Australia, in addition to its traditional mar ket there for coffee, rubber, timber, plywood and peanuts.

In February this year, an Australian trade and develop ment mission visited PNG and looked specifically at the ques tion of promoting Australian

investment by private

companies. As a consequence, the Australian Government is

sponsoring an Australia/Papua

New Guinea Investment Pro motion Conference in Mel bourne this month. The object is to provide an opportunity for PNG to inform the Australian business community of the general economic and invest ment climate in PNG, and to bring PNG officials and businessmen together with their Australian counterparts to discuss specific investment and technology transfer oppor tunities.

Australia’s concern for its own position as an exporter to PNG, and its interest in help

ing its neighbour develop its

own industries and markets, are combined in its trade pro motion work in PNG. The Australian Trade Com missioner’s office in Port

Moresby provides assistance to

Australian exporters and holds regular trade displays at the showroom attached to the office, and, at the same time, gives assistance to PNG firms wishing to launch into the Aus tralian market.

As PNG develops, the mar-

ket for Australian exports and the nature of Australian

imports will necessarily

change. Increasing domestic

food production, greater indus trialisation and development of PNG’s natural resources are

already leading to a growing

percentage of raw and semi processed goods and capital

equipment being imported.

Population changes are also

affecting the market. Since 1971, the number of Aus tralians in the country has dropped by half (from 30 000 to 15 000), which inevitably affects the preference for Aus tralian goods. However,

increasing numbers of Papua

New Guineans are becoming part of the cash economy, with a resulting increase in the purchasing power of the popu lation. While this will provide a growing export market, it will not necessarily be for Aus tralian products. The major growth sector of the market for consumer goods will be the growing middle classes in the urban centres.

PNG will provide a growing export market in the future for exporters keen to understand and provide for its changing needs.

The Pacific Islands:

While the islands of the Pacific are usually grouped together for trade considerations, it is important to remember that the region is made up of very diverse nations. There are wide-ranging differences in size, population, affluence and natural resources. Australia’s main interest is in those islands which constitute the South Pa cific Forum: the Cook Islands, Fiji, Kiribati (formerly the Gil bert Islands), Nauru, Niue, Solomon Islands, Tonga, Tuvalu and Western Samoa.

New Caledonia is also an im portant trading partner.

Tourism, of course, plays a large part in the economies of many of the Island nations and because of the predominance of Australians visiting the area, it looms large as a major com ponent of the relationship be tween these countries and Australia.

Because of its importance,

the effects of tourism must be taken into account when look ing at the question of economic relations and the total balance of trade between Australia and other individual nations. In this regard, it is difficult to include the value of this industry with other cold financial facts nor mally included on a balance sheet. However, its effect is considerable and, in many cases, offsets what would nor mally be regarded as an imbalance in trade.

Fiji, for example, had in excess of 85 000 Australian tourists for the calendar year 1978. In that same year, 21 000 Australians visited New Caledonia, 10 000 went to the New Hebrides and 9000 arrived in Tahiti.

Australia’s principal market among the Island nations is Fiji, where its total exports were worth $77.7 million in 1977/78. The major export was petroleum (26.9 m), with ma chines and machinery (8.3), wheat (4.7), iron and steel (3.0) and rice (2.1) following behind.

Australia imported $ 10.4 m worth of goods from Fiji, prin cipally gold (5.5) and coconut oil (3.1). Fiji was the 13th lar gest market for Australian manufactures in 1977/78, valued at $50.7m.

New Caledonia is Australia’s second largest Island market, worth $23.6m in 1977/78.

Food, drink, tobacco, pet roleum, rice and sugar were the

principal goods exported.

Australia exports machinery and fresh meat to Nauru

(imports natural phosphate);

rice, beer, machinery, chemi cals and sugar to the New Hebrides (importing wood and coffee); rice, machinery, pet roleum and beer to Solomon Islands (importing timber and tuna); and flour, machinery, prefabricated buildings and rice to Western Samoa (importing timber and cocoa beans).

Smaller markets are Kiribati and Tuvalu, to which we export rice, flour, canned meats and

machinery, French Polynesia

(rice, dairy produce, meat), Tonga (flour, electric machin